McCain Proposes Suspension Of Federal Gas Tax During Summer

By Mike Wereschagin and Salena Zito, Pittsburgh Tribune-ReviewApril 16, 2008

Sen. John McCain on Tuesday proposed a summer-long suspension of the federal gas tax that aides said would save drivers $10 billion.

Speaking at Carnegie Mellon University during his campaign's first visit to Western Pennsylvania, the presumptive Republican presidential nominee proposed doubling the income tax exemption for dependents to $7,000, phasing out the Alternative Minimum Tax, and banning Internet and cell phone levies. McCain said he would raise Medicare prescription drug premiums for affluent seniors.

He railed against both Democrats and Republicans for their stewardship of the federal budget.
"In so many ways, we need to make a clean break from the worst excesses of both political parties," McCain said. "For Republicans, it starts with reclaiming our good name as the party of spending restraint."

Democrats have criticized McCain for what they said was his slow reaction to the nation's mortgage crisis and statements he has made saying the economy is not his area of expertise. He shot back yesterday, criticizing Sens. Hillary Clinton and Barack Obama for their opposition to some free trade deals and saying they were extolling "the false virtues of isolationism."

"Senators Obama and Clinton feel we should bury our heads and
industries in the sand and hope we have enough left to live on as the world
passes us by. But that's not good policy, and it's not good leadership," McCain
said. McCain favors the Colombia Free Trade Agreement. Obama and Clinton oppose
it.

Clinton policy director Neera Tanden said McCain's plan would "bankrupt our government" while cutting the corporate tax rate to 25 percent from 35 percent. Both campaigns have tried to tie McCain to an unpopular president, saying his election would amount to a third term for President Bush.

"I am proud to run on my record and my vision for the future of
America," McCain said in an interview after his 30-minute speech. "There are
many areas in which I agree with President Bush, and there are other areas in
which we are in disagreement. ... Americans will make their own judgment. They
will judge me on my record, and a lot of Americans know me."
Many in the
middle class are afraid of the country's economic downturn, McCain
said.

Then, touching on a theme often used by Obama, he said hope would see the country through.

"I have got to renew their fundamental belief in America and restore hope and trust and confidence," McCain said. "And I can do that. Not through gloom-and-doom and questioning their values and their beliefs, but by reinforcing those values and beliefs and giving them inspiration for the future."

Some economists took issue with McCain's proposal to suspend the 18.4-cent federal gas tax and 24.4-cent diesel tax between Memorial Day and Labor Day, saying it contradicts his pledge to cut carbon emissions and it would lead to higher fuel prices in the long run by stoking demand.

"I think John McCain is both a smart man and a man who understands this stuff. When he's talking about eliminating the gasoline tax this summer, I don't see that as anything but political pandering," said Lester Lave, economics professor at Carnegie Mellon's Tepper School of Business.

If gas gets cheaper, people will drive more, demand will rise and the country will have to import more than the 12.5 million barrels of oil a day it imports now, Lave said.

"Increasing imports by a million barrels a day would make $100-a-barrel petroleum look really cheap. The only way to bring prices down is to reduce demand," Lave said.

McCain deserves credit for his call to raise prescription drug premiums, said Steven M. Sheffrin, dean of the Department of Economics at the University of California, Davis.

"That's actually a courageous stand, I think," Sheffrin said. "It shows that even though he favored tax cuts, he is concerned about equity issues."

McCain would raise the premiums for individuals who make more than $82,000 a year, or $164,000 for couples filing jointly.

McCain also said he wants to freeze for one year about $800 billion in non-military, non-veterans-related discretionary spending. That would save about $15 billion, said McCain senior policy adviser Doug Holtz-Eakin.

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